Asia factory outlook at lowest since pandemic on Trump tariffs

Manufacturers across Southeast Asia turned the least optimistic about future growth since the depths of the pandemic amid Trump’s long tariff rollout, even as activity improved last month.

Confidence in future output across the region fell to the lowest since July 2020, according to S&P Global purchasing managers’ index data published Friday.

The pessimism comes even as overall output improved in July, as the headline index of activity rose for the first time since March to 50.1, just above the 50-line demarcating growth or contraction. That’s after contracting in June the most in nearly four years
Manufacturers across the region, which the world relies on for goods, have been whipsawed since early this year by White House trade policy. After unveiling in April some of the highest tariff rates in Asia, President Donald Trump has since set tariff rates of 10% to 40% for the region.

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Economies in the region are highly reliant on industrial production and exports, particularly to the US, and serve as a barometer for global trade activity and demand.

There were other slight improvements in external demand, as new export orders contracted at a softer pace and output prices rose at a faster pace, indicating increased demand from abroad.

“Despite these emerging positive trends, the latest data also indicated a further erosion of confidence,” said Maryam Baluch, economist at S&P Global Market Intelligence. “While an increase in output is anticipated, the growth rate is expected to remain subdued.”

Meanwhile, overall activity in Japan and South Korea contracted for another month.

The new orders, output, and employment measures together account for three-quarters of the PMI index, and surveys are conducted in the second half of each month.

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